Classic cars owners could lose thousands on insurance claims as old cars soar in value

Motorists face losing tens of thousands of pounds on insurance claims because they do not realise the cherished old car on their driveway has soared in value.

The price of the average classic car - vehicles aged 20 years or older - has rocketed over the past decade, according to figures from the Historic Automobile Group.

It may not be surprising that luxury cars such as Porsches, Bugattis and Bentleys from the Sixties, Seventies and Eighties now fetch up to eight times more than they did in 2004.

Good investment: A Fiat 500 dating from the Sixties, which could have been snapped up for as little as £4,000 at the turn of this century, might fetch as much as £40,000 today

But other vehicles, such as early VW Golfs, Toyota MR2s, Ford Fiestas and Ford Sierras, are also soaring in value. In many cases, that old car you bought for a few thousand pounds some years ago could now be worth a small fortune.

A Ford Escort Mk3 dating back to the early Eighties would have sold for £3,500 in 2004. Today, it would typically fetch £8,000. An immaculate model with only a few miles on the clock could go for £26,000.

A Fiat 500 dating from the Sixties, which could have been snapped up for as little as £4,000 at the turn of this century, might fetch as much as £40,000 today.

The problem is that many owners of these now classic cars first bought insurance for them some years ago and have simply renewed it automatically each year, not realising that the car’s value has jumped.

It means the value they have given the insurer to cover it for in the event of the car being damaged or stolen is actually far less than it should be. When they make a claim, their insurer could refuse to pay out the full claim.

Gerry Bucke, general manager at specialist insurance firm Adrian Flux, says: ‘Under-insured owners could end up receiving only a percentage of their car’s value if the worst happens.

‘We have come across vehicles that have doubled in value since the owner last checked, so it’s absolutely vital to try to stay on top of market trends.’

The company is now writing to thousands of its own customers warning them to check how much their cars could fetch if sold.
If your vehicle turns out to be worth much more than the limit of your cover, most insurance companies will normally pay a proportion of your claim.

However, in some extreme cases, firms may refuse to give you a penny.

Graeme Trudgill, executive director of the British Insurance Brokers’ Association, says: 'Lots of people have old cars in their garage, which have been sitting there for around 30 years.

'They simply don’t realise that grandad’s old banger is now a classic motor and worth a mint.

'It’s really important to get a proper valuation every year. Otherwise, if the car is stolen or is involved in an accident, they may struggle to replace it.'

John Hodgson, a retired antiques and furniture dealer from Rainham, Essex, paid £5,000 for his 1969 Daimler 250 V8 about 15 years ago.

The 66-year-old’s insurance policy would pay out up to £12,500 if the car was written off or stolen - but after checking he found the vehicle was now worth £37,500.

Mr Hodgson says: ‘I was a little surprised, but prices for these makes are really creeping up.’

Darren Campbell, a 49-year-old motor engineer from Carshalton, Surrey, paid £8,000 for his 1970 Porsche 911S in 1996.
He recently had the car valued for the first time in years and found it is now worth £80,000.

Mr Campbell says: ‘When you’ve had the same car for as long as I have, it’s all too easy to take your eye off the ball. From now on, I will be keeping track of its value every year.’

HM Revenue & Customs classes a car as classic if it is more than 15 years old and worth more than £15,000. You don’t need to pay any car tax for vehicles built before January 1, 1974.

Many insurers class classic cars as any car built more than 20 years ago.
Such cars can still be covered by a normal motor insurance policy, but premiums for specialist classic car insurance tend to be cheaper than conventional cover because insurers assume that the vehicle is well-maintained and not driven that often.

But be sure to check the policy’s small print, as many firms insist you do not drive the car more than 7,500 miles a year.
You should always tell your insurer if you have another car.

A spokesman for insurer LV= says: ‘Few people have a classic car as their main car - they tend to have another vehicle for everyday driving.

‘People with two or more cars may be entitled to a discount if they insure both cars with the same insurer.’